Why Are Prescription
Drugs So Expensive
in the United States?

It’s official, the US has the highest drug prices. With about 75% of Americans worried about being able to cover the costs and 33% unable to take their medication as prescribed thanks to the inflated prices, many are asking why.

In 2019, the US spent an average of over $1,000 per person on prescription medication, the highest of any country. That’s over $500 more than comparable countries and over $200 more than the next-highest country on the list. Drug prices are expected to continue rising competing with the prices of doctor visits and hospital care, and having insurance won’t save the average American. Insurance premiums, co-pays, and deductibles are becoming just as out-of-reach thanks to those price raises. Unfortunately, there are many reasons this is happening.

The Reasons Why

When it comes down to it, a lot of the blame lies on pharmaceutical manufacturers’ shoulders. Highly inflated profit margins mean greed, and they aren’t giving that up easily. From a lack of regulations and some shady practices, Americans are the ones feeling the hurt.

Negotiating
is Banned

A law passed in 2003 that helped form Medicare Part D also banned negotiation by the US government with pharmaceutical manufacturers. The Inflation Reduction Act will give that ability back in 2026, but it has wreaked havoc.

Other countries have something called single-payer healthcare. This is where the government pays for the majority of healthcare costs, including prescription medication. When that is the case, the government negotiates with drug companies in order to pay a fairer, and much lower, price. Given the power of the government, the drug manufacturers are forced to accept lower deals.
America is focused more on private healthcare, leaving insurers and local government programs to do the main haggling. With how large and powerful drug manufacturers are in the US, the power is on their side. Meaning higher prices for everyone.

No Government Oversight

In line with the last point, the US has very few regulations on how new medication can be priced.

Other countries have government programs that help cap the price of new or existing drugs. If not, then a drug’s price has to be passed by a government board before making it to the market. This forms a checks and balances system to prevent too high prices.

Drug companies in the US set their price, and if their drug is one of a kind, that means incredibly high costs.

Inflated Beyond Control

A recent study shows that prescription drug prices in the US are rising faster than the US inflation rate. With an average inflation rate of 1.3%, prescription drug companies double that with an annual inflation average of 2.9%.

The rise of GLP-1’s in America has also sped the inflation rate. 

This isn’t only affecting new drugs hitting the market each year but pre-existing ones as well. Unfortunately, this number is expected to continue rising. As we mentioned earlier, these raises in price also affect those with good insurance. Insurance prices and co-pays are decided yearly based on the market value of care. Inflated drug prices mean inflated insurance prices as well.

No
Comparison

Drug research can be easily found, but comparisons between similar drugs can not. This lack of research means doctors might stray away from prescribing a cheaper alternative in favor of the better-known name brand.  A prime example of this is Mounjaro, which is the only medication that uses the active ingredient tirzepatide.

The lack of research does harm beyond the price we see on screen, too. Some generic alternatives perform better than their brand-name counterpart. Meaning you might be paying a higher price for something less effective. This research is sometimes squashed on purpose by the more significant drug companies to prevent that news from getting out.

Pay to
Delay

This is precisely what it sounds like. Prescription drug companies will go to smaller, generic manufacturers and pay them to wait to release their products. This usually means both companies come out with more money than they would have if the generic drug were released.

It also means that there is no competition meaning the one with the monopoly can once again set their price.

Difficult
to Copy

Drug companies and manufacturers might also deny sharing their drugs with other companies, making it nearly impossible for them to create a generic alternative. Or pull a tactic known as “evergreening,” which means making minor drug changes to delay generics manufacturing.

An example is Ozempic, which uses semaglutide as its active ingredient. They will not be going generic until 2033. 

Changing something small allows them to pull a new patent, meaning years have to pass again before they have to share their findings.

Drug
Patents

Speaking of patents. Many of the higher-priced drugs have drug patents held by their pharmaceutical companies. These patents prevent other companies from making and selling cheaper alternatives out of fear of a lawsuit.

This also guarantees that those holding the patents can name their price. David Mitchell of The Common Wealth Fund, created to help fight high costs and provide needed medical research, explains why these patents exist.

“The idea is you made an investment. You deserve a return on that investment. For a small molecule drug, a period of exclusivity is five years. For an orphan drug for a small population, the period of exclusivity is seven years. For biologics it’s 12 years. During that period of exclusivity, you are able to exercise monopoly pricing power. The short outcome of that is that drug companies are able pretty much to charge whatever they want, and we have no way to stop them.” – David Mitchell

Deceptive
Marketing

When drug companies are pushed on why they see such high-profit margins, they make back in manipulative ways. They justify the high prices by saying it is needed for further research and medication development. A significant portion of profits is going towards advertising and lobbying, where they imply people with incurable diseases might never see a cure if regulations start affecting their prices.

However, a lot of the money that is used for research and development comes from the National Institutes of Health. Tax dollars fund this. This means very little of a drug company’s profits are needed to make new medications or cure diseases.

This deceptive marketing doesn’t just influence how the average American thinks; it affects who we vote for and what they believe. Looking at any election, you’ll see that while healthcare costs are a top concern for both parties, neither agree on how to fix it.

The Dangers of High Prices

Besides the apparent adverse side effects on your wallet, the downsides to our health are dangerous.

Doctors say patients have reported cutting pills in half or skipping multiple doses because they can’t afford refills. We don’t have to tell you how dangerous that can be for certain conditions, like Diabetes. Rationing insulin can’t just possibly cause death, it has, with multiple cases each year in the US. While death is the primary concern of rationing meds, it isn’t the only one. Many with chronic pain conditions are simply still living in that pain because they can’t take medicine as prescribed. Those with more complex diseases are having to turn towards government assistance to afford medication pricing that can be in the hundreds of thousands of dollars each year.

These extreme drug costs create a domino effect that we can see in other political areas.

How Can You Save Money?

If you are affected by the high drug prices in America, keep reading for some tips on how to cut costs.

Check for generic options, and ask your provider if they could prescribe those instead if they are cheaper. Many providers can also mark “substitutions allowed” on their script, which would allow the pharmacist to make lower-cost substitutions.

Checking which drug your insurance covers is another way to save money. Many insurances cover lower-cost alternatives.

Purchasing a drug in bulk can help lower the cost. If you want to do this, please make sure your doctor changes the prescription so you can get a larger supply in one go. 90-day supplies are typically the cheapest per pill.

Lastly, mail-order and online pharmacies are often cheaper. Diet Pens offers weight-loss medications to American citizens for a fraction of the price. For more information, feel free to contact us

Conclusion

When it comes down to it, greed and lack of oversight have created the current problem in America.

The US government is hesitant to step on drug companies’ toes thanks to deceptive marketing. Those companies use their profits to extinguish competition and push for fewer regulations. The only natural way to fight rising costs is to vote for candidates at all levels of
government that will hold those companies accountable.

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